Why basic income can’t possibly work

Imagine three people starving in the middle of a desert. They don’t want to starve to death, and so they come up with an idea. Every day in the morning they will collect all their money and split it evenly. They could then use the money to buy food from each other and with that not only they would survive, but even have money left for whatever they want. So next day they do exactly that, and few days later they die.

For a time, I have been aware of the universal basic income (UBI) topic, and while cautious (“too good to be true” rule), I was not able to put my finger on it. On an intuitive level, anyone must at least feel in the back of their head that giving free money to everyone can’t suddenly make everything better. But let’s be more specific first.

What is Universal Basic Income?

The point of UBI is to take a lot of money from “somewhere” and give everyone some nice, identical amount of it every month. So much money, that not only no one would need to worry about survival, but they can have a nice life from it.

The goal is to enable people to do whatever they would like to do, instead of working in order to obtain a salary. Disconnect work and wage. Sounds great.

The way there

What it took for me to understand was going to see a “documentary” called “Free Lunch Society”, which gave me an hour to focus and think, with nice pictures, propaganda and nonsense in the background.

The reason revealed itself to me and was suddenly very clear. Ironically, it is connected to something they said in the “documentary”. You can’t eat money.

One obvious issue is where to take that money from. Even though it’s important, I don’t want to dive into it. For UBI people, the question is very simple — for them, there are always some rich people to pluck.

The only concern that sounds from the UBI debate is that when people receive their UBI, they might stop working. That would obviously lead to lower production, resulting in big trouble. UBI proponents disprove this by pointing to experiments that have shown that people on UBI work the same or even a higher number of hours than they did at their previous employment. Therefore, the economy will go on working just fine and can be even better owing to people’s happiness from doing the work they like.

So what is wrong?

The critical problem is that it is not the number of work hours that matters. What matters is real value that people produce. Be it direct production, like mining or growing food, or intermediary work, such as organizing rice shipments in excel sheets, all this work is needed to provide people with what they require in their life.

We don’t live in small tribes spread over vast empty areas with infinite resources anymore. Today, we live in large density, especially in cities where millions live in a small spot. We are almost entirely dependent on modern production and complex systems that make it all work — systems that get soy beans from a field in Vietnam to a kitchen in Detroit, because at the moment that is the most productive way to do it.

All this production depends on the work of the people. Work that often is no fun, is not pleasant, is sometimes so far from the end products that the people doing it have no idea what their contribution is. But without these people and their work, it would all collapse. Not only would there no longer be any iPhones, but even food will not be able to grow or reach its destination — people will starve and die.

What does this have to do with UBI?

When people work for a salary (or profit from their business), it means someone (an employer or a customer) pays them for their work. Why do others pay them? Because the work brings the others value in return. The salary or profit is an explicit confirmation that the work a person has done had value for someone else.

Sometimes it is hard to see how one man’s work connects to a real production somewhere, maybe even on the other side of the world. But that is exactly what we have money for — to transfer the value across the chain, from the valuable commodity on one side to the person contributing to it on the other. Unless there is some imperfection in play, whenever we get paid for our work, it means that we have produced value that made someone’s life better.

At this point, it should be easy to see what happens when people get unconditional money instead of a deserved salary. When people do what they enjoy doing, maybe it will be productive, but maybe not. There is no connection.

Basic income will never result in someone taking a more productive job, because if they wanted to, they would have done so already in order to get a higher salary. So it will only lead to people choosing work that will be more pleasant, but less productive. There will be more artists and windsurfers, fewer factory workers and farmers. There will be less goods, less food, less organisation. And less food in today’s densely populated society means that people will die. If the UBI proponent’s dreams come true and work is disconnected from wages or profits, millions of people will die as a result.

Basic income is nothing other than another form of communism. “Free” stuff to everyone to create paradise. But giving “free” stuff does not create anything, it only destroys.

How many more millions have to die until the communists stop trying to sneak their agenda in under different names?